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2016 (6) TMI 1382 - AT - Income TaxPenalty u/s 271(1)(c) - trading additions made on account of cessation of liability by invoking provisions of section 41(1) - HELD THAT:- It is settled proposition of law that the penalty proceedings and quantum proceedings are two different and distinct proceedings. By way of penalty proceedings, the revenue is forcing the tax payer to pay additional amount of tax in addition to the tax assessed and interest charged in the form of penalty for concealment of particulars of his income or furnishing of inaccurate particulars of such income. It is settled position of law that the assessee is to be put to notice for the specific charge. The Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory,[2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that the notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) as to whether it is for concealment or furnishing inaccurate particulars of income. Notice under section 274 was on the printed format. The AO has not given any specific charge. Therefore, the penalty proceedings as initiated are vitiated for want of procedural compliance. Thus the penalty order is quashed being bad in law. This ground of the assessee is allowed.
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